Articles in Category: Making Home Affordable

In our previous blog post, we discussed some of the basics of FHA foreclosure avoidance and loan modification. But how does FHA loan modification work? FHA HAMP, also known as the FHA Home Affordable Modification program is a way for home owners to avoid foreclosure through a permanent loan modification. But in order to become eligible for FHA HAMP, borrowers have to meet certain criteria as described on the FHA/HUD official site. Who is eligible to apply for FHA HAMP? “Mortgagors with FHA-insured mortgages that do not qualify for other loss mitigation programs and with adequate debt-to-income ratios. Homeowners must successfully complete a trial payment plan before becoming a full participant in the program.” The trial payment plan is the key to the success of the borrower’s involvement with HAMP. | more...

There are many reasons why you might need to take steps to learn who owns your mortgage loan. When you apply for a home loan at the lender of your choice, that financial institution “owns” your loan. But things can change-a financial institution could be purchased by a larger company, the loan itself may be sold off to another financial institution, etc. When you need to apply for FHA refinancing, an FHA reverse mortgage, or other type of loan that requires your existing mortgage data, you may need to look up who currently owns your mortgage loan. This is especially true for those looking for loan modification help through a government program such as the Obama mortgage, Making Home Affordable, or other programs. Some foreclosure avoidance programs are only for | more...

On Friday, April 24 2015, the FHA and HUD issued a press release detailing “significant changes” to the Distressed Asset Stabilization Program or DASP. According to HUDNo 15-048, “In an effort to better serve homeowners looking to avoid foreclosure, loan servicers will now be required to delay foreclosure for a year and to evaluate all borrowers for the Home Affordable Modification Program (HAMP) or a similar loss mitigation program.” “HUD is making additional improvements to the Neighborhood Stabilization Outcome (NSO) sales portion of DASP which are aimed at increasing non-profit participation. Updates include giving non-profits a first look at vacant properties, allowing purchasers to re-sell notes to non-profits, and offering a non-profit only pool.” That is a major alteration from the old standard, which permitted lenders to foreclose on a | more...

Recently, the FHA issued a press release announcing changes to its loss mitigation and foreclosure avoidance policies. We’ve reported on some of those changes in previous blog posts; we haven’t yet covered the FHA’s revised loss mitigation options and changes to those policies. According to HUDNo.12-22, in the section titled “Updated Loss Mitigation Priority Order Requirements” you’ll find the following new policy information on how the FHA handles its loss mitigation options–described in order of priority. According to the FHA, “After evaluating a delinquent mortgagor for Informal and Formal Forbearance Plans, FHA’s Loss Mitigation options must be considered in the following order: (1) Special Forbearances; (2) Loan Modifications; and (3) FHA-HAMP.” How does this evaluation process work? The FHA explains, “Before four full monthly installments due on the mortgage have | more...

In a recent Mortgagee Letter (ML2012-22), the FHA and HUD describe a variety of changes to FHA Loss Mititgation options. “Loss Mitigation” basically refers to foreclosure avoidance programs for borrowers in trouble on their FHA mortgages. The FHA Mortgagee Letter opens by stating, “No later than 90 days after issuance of this Mortgagee Letter, (November 16, 2012) mortgagees must begin to assess mortgagors in default under FHA’s loss mitigation priority order and policies referenced herein. FHA updates on its loss mitigation/foreclossure avoidance policies includes the following new requirements, as described below. According to the FHA, “Before a mortgagee considers a delinquent mortgagor for one of FHA’s Loss Mitigation Home Retention Options, the mortgagee must first evaluate the mortgagor for both Informal and Formal Forbearance Plans.” Additionally, “Informal and Formal Forbearance | more...

The FHA has announced important changes to its Loss Mitigation Home Retention options, intended as stated in FHA Mortgagee Letter 2012-22, to “reduce the number of full claims against the FHA Mutual Mortgage Insurance Fund by assisting a greater number of qualified, distressed mortgagors in retaining their homes.” The new rules, posted on November 16, have specific requirements for the lender. “No later than 90 days after issuance of this Mortgagee Letter, mortgagees must begin to assess mortgagors in default under FHA’s loss mitigation priority order and policies referenced herein.” The new FHA loan rules alter FHA’s Home Affordable Modification Program’s (FHA-HAMP) guidelines, as well as “the definition of “Special Forbearance” in Mortgagee Letter 2002-17; and Loss Mitigation priority order guidelines in Mortgagee Letter 2000-05.” What are these changes? We | more...

With home foreclosures still in the news even several years after the housing crisis of 2008, we've written a fair amount on topics related to foreclosure on FHA home loans. Default and foreclosure are often preventable if the buyer takes action early; in some cases a simple bit of additional information is the only thing a borrower needs to take action that can save the home. Missing one FHA mortgage loan payment isn't good, but it is not the end of the world if the buyer contacts the loan officer and the FHA to discuss next steps. But what happens when the buyer misses the a second payment? The FHA says when the second payment in a row is missed, the bank will definitely reach out to the homeowner, but | more...

When FHA borrowers get into financial trouble, the best thing to do is to get in touch with the FHA and the lender immediately to start damage control. This helps avoid the borrower going into default or foreclosure on the FHA loan. Some borrowers mistakenly think that they are in foreclosure territory after missing one or two payments--but many more wrongly believe they have much more time even after missing two or more payments before the foreclosure proceedings start. The truth is that the foreclosure often varies depending on the state and the lender. How much time does a borrower have before going into default and foreclosure in general?

The FHA has many programs to help home buyers find and purchase a home. But FHA help doesn't end there--the government has a vested interest in helping people keep their homes even in times of financial difficulty. When borrowers get into trouble with their FHA mortgage loans, the first line of defense is to address money problems as early as possible. That's why the FHA offers their toll-free number (1-800-569-4287) to put home owners in touch with a housing counselor.

When borrowers get into trouble on their FHA mortgages, the FHA encourages them to act quickly in order to save their homes. But some borrowers don't act fast enough and fail to qualify for some government home loan modification or refinancing programs. Other borrowers aren't qualified for certain programs even when they do act. In cases where a borrower has tried loan refinancing, modification or other home owner bailout programs there may be an alternative to foreclosure in the form of something known as the short sale.

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